The Fallout From The October Cyber Attack on TalkTalk Estimated at 101,000 Lost Customers

The latest quarterly update from communications service provider TalkTalk shows that one of the results of last October’s much publicised cyber attack on the company has been the loss of 101,000 customers. Some commentators outside of TalkTalk have even suggested that the number of lost customers could be twice as much as this figure.

The attack saw the personal details of between 155,000 and 157,000 customers (reports vary) hacked, with approximately 10% of these customers having their bank account number and sort code stolen.

If this doesn’t sound bad enough, putting the trading impact of the security breach in monetary terms makes it sound even worse, an estimated £15M with exceptional costs of £40-45M !

Why Does It Cost This Much?

The fact that the breach only directly affected a relatively small proportion of TalkTalk’s 4 million customers is not the issue. The cyber attack required TalkTalk to shut down its sales for a considerable period of time (sales would have been hampered by fresh bad publicity during that period anyway).

This obviously meant a serious loss of potential revenue from new customers, plus the loss of upsell revenue for mobile, broadband and TV services. Add to this the departure of many customers who lost confidence in TalkTalk’s ability to safeguard their personal details and data, and you can begin to see how the incident could make such a substantial dent in the company’s revenue, brand value, and in attitudes towards the company.

There have also been further costs incurred since the incident from restoring and improving security measures and other IT costs, incident response and consultancy costs, as well as customer retention through free upgrades.

Time to Recover

As with any high profile commercial setback it can take time for the incident to move further back in the minds of an organisation’s many publics and TalkTalk’s recent experience is no exception. CEO Dido Harding acknowledges that there has been a period of time that has been dominated by the breach.

The word from TalkTalk now though is that there has been a recovery of sorts during December and January, with TalkTalk citing the results of independent external research that has shown that “customers believe we acted in their best interest”.

Helped By Free Upgrades

One of the customer retention measures put in place shortly after the incident was the offer of unconditional free upgrades that have reportedly been taken up by around half a million customers.

Looking To The Future

Despite gloomy predictions by some commentators, TalkTalk themselves appear to see light at the end of the tunnel and are looking to longer term future opportunities in fixed line and mobile business.